Central and Eastern Europe may be particularly vulnerable to political contagion. The Brexit campaign is already having an impact on politics in the region, with right-wing nationalist parties capitalizing on fears of an increasingly German-dominated EU, stripped of its most pro-free market member and the most powerful champion of non-euro countries. At this month's Prague Economic Summit, the prime ministers of Poland and Hungary warned they would seek big changes in the way the EU operated if the U.K. left, raising the prospect of further clashes with Brussels over differing interpretations of what constitutes the rule of law and European values.

Brexit could unleash hard-to-control economic forces across Europe, too. Some downgrading of eurozone growth forecasts seems inevitable, given the likely disruption to British trade and the prospect of financial-market volatility leading to higher real interest rates. A stronger euro, which would hurt European exports, would also be likely if, as expected, sterling depreciated and the U.S. Federal Reserve decided Brexit was a reason to delay its next interest rate increase. Some eurozone central bankers fear that uncertainty over the future direction of the EU would lead to an even sharper shock as companies and households put planned investment and spending on hold.